Political muscle, misinformation, roll back solar rights in Indiana

Electric meter and inverter
June 9, 2017

The focus on the fight for solar rights has typically concerned places like Nevada and Arizona that have a significant amount of solar penetration. But if Indiana’s recent experience is any indication, the push by utilities to protect their monopoly is truly nationwide. The Indiana legislature passed and Governor signed a bill that rolled back net metering in the state. This experience should serve as a lesson to all solar supporters that their right to go solar can be taken at the behest of powerful interests opposed to solar.

Net metering is an accounting method that credits solar homeowners for the excess electricity their systems generate. When solar systems produce more electricity than the home consumes, that electricity is sent to neighbors. The solar customer receives credit for that electricity and can count it against the electricity they have consumed that comes from their utility.

Indiana net metering opponents, notably the state’s investor-owned utilities, do not see it that way. “The electric utilities were successful in convincing people that net metering was subsidy,” said Laura Arnold of the Indiana Distributed Energy Alliance.

The argument that net metering is a subsidy rests upon the assumption that net-metered customers’ deployment of solar places additional burden on the electric grid that is not covered through their payments to the utility. Net metering advocates point out that distributed solar provides additional benefits to the electric grid that are not accounted for by net metering. These benefits include increased reliability and the reduced need for increased transmission capacity.

The value of solar is variable based upon a number of factors and may differ across utility markets. Net metering supporters urged the legislature to ask the Indiana Utility Regulatory Commission, the state’s utility regulator, to conduct a value of solar study. Notably, net metering opponents in the legislature denied this request.

The bill Indiana passed ends net metering in the state and replaces it with utilities paying solar customers 125% of the average marginal price a utility would pay for electricity. This arbitrary figure significantly undervalues the benefit of solar to the grid.  

The law goes further. It also would allow utilities to increase rates on all customers under the guise of allowing utilities to cover costs ‘paid’ by the utilities for net-metered systems. Additionally, the bill lets utilities charge solar customers to connect to the grid.

This was not the first attempt at rolling back net metering in the state. A similar effort failed in 2015. Net metering opponents used the time between the two pushes well, said Kerwin Olson, Executive Director of Indiana Citizens Action Coalition.

“We started way behind the eight ball,” Olson said. “They had laid the groundwork. That made it even more difficult.” Olson agrees that framing net metering as a subsidy was an effective messaging tactic that played upon antipathy in the state and among legislators for policies that were seen as helping renewable energy.

The law’s aggressive attack on Indianans’ right to go solar may actually offer solar supporters a ray of hope. The bill as passed may violate the Public Utility Regulatory Policies Act (PURPA). This federal law requires utilities to purchase electricity at “just and reasonable” rates. Solar supporters have an opportunity to argue the rate set by the law is neither.

Olson believes solar advocates have an opportunity to push back on attacks on net metering given the unpopularity of the utilities that push them. “There’s a general distrust of monopolies around the political spectrum,” Olson said. The message that resonated was that these are monopolies that don’t face competition, why pass something that limits competition and limits my ability to do what I want to do on my property?”